I'm still surprised that the shortfall
between currency hedged funds and the underlying is so large.
Not exact matches
Take a look at the disconnect
between the strength of the U.S. dollar v. the Japanese yen and flows into
currency hedged funds since April 2014.
Exchange traded
funds, such as the iShares
Currency Hedged MSCI EMU ETF (HEZU) and the iShares
Currency Hedged MSCI Germany ETF (HEWG), can provide access to the eurozone market and Germany, respectively, while potentially mitigating exposure to fluctuations
between the value of the euro and the U.S. dollar.
Most of the large tracking error in the Vanguard MSCI U.S. Broad Market (VUS) was likely the result of
currency hedging, but its annual report also cites «differences
between the market price and net asset value of the underlying US domiciled Vanguard
funds in which the ETF invests.»
Take a look at the disconnect
between the strength of the U.S. dollar v. the Japanese yen and flows into
currency hedged funds since April 2014.
What is the difference
between the Altamira international index
fund (which invests in securities and derivatives based on international indexes) and the RBC international index
fund currency neutral (which actually tracks the MSCI EAFE index but with
currency hedging).
Their main performance metric is 7 - factor
hedge fund alpha, which corrects for seven risks proxied by: (1) S&P 500 Index excess return; (2) difference
between Russell 2000 Index and S&P 500 Index returns; (3) 10 - year U.S. Treasury note (T - note) yield, adjusted for duration, minus 3 - month U.S. Treasury bill yield; (4) change in spread
between Moody's BAA bond and T - note, adjusted for duration; and, (5 - 7) excess returns on straddle options portfolios for
currencies, commodities and bonds constructed to replicate trend - following strategies in these asset classes.
Possibly because they earn much higher MERs on foreign
funds, maybe because they also don't always have to disclose what kinds of
currency hedges and such are in place or maybe because they can pretty much invest in anything they want in
between quarterly reports, or maybe so that they can travel to great places paid for by the money they manage?
To the extent such investments are permissible, a certain percentage of a
Fund's
hedging activities (including its transactions, if any, in foreign
currencies or foreign
currency - denominated instruments) are likely to produce a difference
between its book income and its taxable income.
Safekeeping of
funds The possibility of asset growth Instant exchange of
currency between the network users One common interface for investments in classic assets,
currencies, and cryptocurrencies Forex
hedging
These include the partnering of RippleNet with American Express and Santander to conduct a pilot offering instant and trackable payments
between the UK and US deal, over 100 financial institutions now using RippleNet, Japanese and South Korean banks aggreeing to pilot RippleNet in hope to modernize payment systems, and Michael Arrington starting a $ 100 million (equivalent)
hedge fund using XRP as its base
currency.